Boomers boosting savings pots for Gen-Xers and Millennials
Savers in the UK are expected to hand over £7 trillion between generations by 2050 as part of what has been called the “great wealth transfer”.
The concept of “giving while living” is seeing Baby Boomers pass their wealth onto Generation X and Millennials – helping to reduce the amount of tax Boomers owe in the process, according to online savings platform Flagstone.
And its survey ranks Edinburgh as one of the top UK cities when it comes to how much parents are saving to transfer to their children.
Flagstone commissioned its survey from Censuswide to discover how much this generation of parents is saving for their children, consulting 2,000 parents in the UK in May this year.
It found that saving for their offspring’s future is a clear priority for UK parents. Almost three-quarters are setting money aside for their children – an average of £18,212 nationwide.Most parents who are saving are setting aside between £5,000 and £9,999 (21.3 per cent). The second most common savings amount is £40,000 to £49,999, although only 10 per cent of UK parents have saved this much.
For 40.2 per cent of UK parents, these savings will go towards education or university costs. That’s why more than a third plan to hand it over when their children reach 18 and higher education begins.
The second biggest savings goal for parents is to help their youngsters onto the property ladder (38.9 per cent), reflecting the continuing rise in house prices.
More than half of parents keep their savings plans secret from their children, partly because they think they are too young to understand, or they want the money to be a surprise, while some believe their children should build their own savings pots first. When broken down by city, London parents save the most on average (£23,859), closely followed by Edinburgh (£23,669). Sheffield, Cardiff, and Birmingham complete the top five.
Claire Jones of Flagstone says: “It’s encouraging that so many parents are already saving for their children’s futures. But it’s not just about how much they save – it’s also about where they put it.
“Junior ISAs are one option, letting parents save tax-free until their child turns 18.“Beyond that, finding accounts with better rates can make a meaningful difference to the amount children eventually receive. That’s where platforms like Flagstone can help, by giving parents access to a wide range of competitive savings accounts – all in one place.
“The sooner parents start, the more time their savings have to grow. Even small amounts saved regularly can build up significantly over the years.”
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